What happened
Week to date, shares of DraftKings (DKNG -0.87%) were up 5% as of 11:54 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The gain outperforms the S&P 500 index, which was down nearly 5% on the week after another bad inflation report sent the broader market lower.
On Friday, DraftKings announced an extension to its partnership with UFC to launch a new iteration of gamified non-fungible tokens (NFTs) on the DraftKings marketplace. The game, Reignmakers UFC, allows fans to collect NFTs of their favorite UFC fighters to compete in games for prizes. The NFT-based game is scheduled to go live later this year.
The stock is down 51% year to date, along with the broader market sell-off this year.
So what
NFTs are part of DraftKings' monetization strategy to attract more users to the platform and get them to spend additional money over time.
Other than the partnership news with the UFC, one factor that might be contributing to the stock's positive return this week is valuation. The stock is 80% off its all-time high, so bargain hunters are likely swooping in to buy shares of this leading online sports betting platform ahead of opportunities in the burgeoning sports betting market.
Now what
Goldman Sachs expects the online sports betting market to reach annual gross gaming revenue, excluding winning payouts to users, of $39 billion by 2033. That compares to DraftKings' trailing-12-month revenue of $1.4 billion, which includes payouts to winners, but still leaves plenty of headroom for more growth.
The only headwind standing in DraftKings' way is getting the necessary state-by-state approval to launch its platform. But the company has been making good progress, now operating in 17 states across the U.S. as of early May.
